Housing News

The Back and Forth on Interest Rates

Hello everyone. Welcome back to the Mortgage Rundown. Today we are going to talk about what’s happening with interest rates.

The last month has been very interesting to say the least.  Just when it looked like lower rates were a certainty thanks to the 50bps move by the Federal Open Market Committee (FOMC) last month, we sit here today with the 10yr yield 60 basis points higher. So, what happened?

Since the last Fed meeting we have seen data that has somewhat contradicted the FOMC’s 50 basis point move.  September’s unemployment rate actually went down after rising relatively consistently for nearly the past two years. Wage inflation is still very high and job openings actually moved higher for August. All signs point to a strong economy and that will hurt bond yields.

Not to mention we have an election right around the corner and there is a lot of concern in the market about the potential for more deficit spending and a new administration that is willing to increase Treasury issuance right as the economy starts to slow down. Also a big negative for bonds.

Call it a string of concerns around bonds and that’s why we have seen rates back up over the past month plus. 

That being said, earlier this week we did see the job openings number for September actually take a pretty big hit, and more importantly we have the unemployment rate tomorrow which should cause a lot of attention. 

Rates have moved so far since the last report, so the big question will be whether or not September was a blip in the face of rising unemployment or has the jobs market found some footing and the economy is likely to have a very soft landing, which could really impact rates.

That’s it everyone from the capital markets desk this week. Thank you all for watching and have a great day.